SITTING IN THE CENTRAL FAMILY COURT
First Avenue House, 42-49 High Holborn
London WC1 6NP
B e f o r e :
| BELA BLOOM
|- and -
|BARON ALEX BLOOM
|- and -
The Respondent appeared in person
ROBERT AVIS (instructed by CHARLES RUSSELL SPEECHLYS) for the Intervenor
Hearing date: 4th December 2017
Crown Copyright ©
This judgment was handed down in private on 24th January 2018. It consists of 33 paragraphs and has been signed and dated by the judge.
The judge hereby gives leave for it to be reported.
MR RECORDER CUSWORTH QC:
"29.12(1) Except as provided by this rule or by any other rule or Practice Direction, no document filed or lodged in the court office shall be open to inspection by any person without the permission of the court, and no copy of any such document shall be taken by, or issued to, any person without such permission.'
Under both r 10.15(6) and r 10.20(3) I have a discretion. In the light of the authorities I propose to exercise it by reference to the following considerations.
It is greatly in the public interest that all tax due should be paid and that in serious cases, pour encourager les autres, evaders of tax should be convicted and sentenced. It feels unseemly that a judge to whose notice tax evasion is brought should turn a blind eye to it by not causing it to be reported to the Revenue. In one sense that would almost cheapen the law.
On the other hand it is greatly in the public interest that in proceedings for ancillary relief the parties should make full and frank disclosure of their resources and thus often of aspects of their financial history. Were it to be understood that candour would be likely to lead – in all but the very rare case – to exposure of under-declarations to the Revenue, the pressure wrongfully to dissemble within the proceedings might be irresistible to a far bigger congregation of litigants than is typified by the husband in these proceedings, who of course resolved not to be candid in any event. False presentations by respondents in ancillary proceedings have two repercussions, both seriously contrary to the public interest:
(a)either the judge remains deceived, in which the case the award is likely to be inaptly low, or he perceives the deception, whereupon he may draw necessarily broad inferences of hidden wealth which, depending on their scale, could make the award inaptly high or indeed leave it still inaptly low; and
(b)applicants are seldom minded to compromise their claims on the basis of presentations which they believe to be materially false and their stance, if justified by the court's findings, will often be upheld in relation to costs. Yet the family justice system depends upon the compromise of all but a few applications for ancillary relief.
Between these two opposing public interests must the individual circumstances be weighed.
72. In [S v S (above) and A v A; B v B (below)], the obligation on the parties to make full and frank disclosure in their financial disputes was of such importance that it was in the public interest to preserve confidentiality of that information by means of the implied undertaking. In order to achieve compliance with disclosure by the party under the obligation to do so, the party seeking the disclosure is required by the court only to use that information for the purposes of the proceedings. It is the protection provided by the court in cases of compulsion. Ancillary relief applications are appropriately heard in private... The public may not, without leave of the court, hear the evidence given in these applications. It would make a nonsense of the use of an implied undertaking if information about the means of a party, in some cases sensitive information, could be made public as soon as the substantive hearing commenced. Information disclosed under the compulsion of ancillary relief proceedings is, in my judgment, protected by the implied undertaking, before, during and after the proceedings are completed….
73. The implied undertaking extends… to voluntary disclosure in ancillary relief proceedings, to the information contained in the documents and to affidavits and statements of truth and witness statements. All such information is required for the full and frank exchange of financial information and all the relevant circumstances which may be necessary to enable the court to know, in order to come to a fair conclusion in accordance with the exercise of its statutory jurisdiction...
As a general rule documents and other evidence produced in ancillary relief proceedings (now called financial remedy proceedings) are not disclosable to third parties outside the proceedings save that exceptionally and rarely and for very good reason they can be disclosed with the leave of the court. The fact that the evidence may be relevant or useful is not by itself a good enough reason to undermine the rule.
 No one would seriously argue with the proposition that it is in the public interest for the right amount of tax to be paid by taxpayers. Furthermore, there is no doubt that the documents sought in this case would be relevant to the proceedings before the First-tier Tribunal Tax Chamber and, for obvious reasons, might well be of assistance to them. But that is not the test I apply.
 Having considered and balanced the competing public interests here, I have no hesitation in finding that there is nothing rare or exceptional about this case which takes it outside the general rule. The husband is entitled to say, with indignation, that he complied fully with the rules of disclosure and the confidentiality/privilege attached to the documents and other evidence produced thereby should not be breached. HMRC have advanced no discernible compelling reason why the general rule should be relaxed in this case.
 I am fortified in this view by the fact that: (a)There is no suggestion that the husband is guilty of tax evasion or criminal conduct in relation to his tax affairs. This is a routine tax assessment; (b)The burden of proof is anyway on the husband in the tax appeal. He must prove his case; (c)The judgments at first instance and on appeal are already available to HMRC.
'… the court does not regularly send papers to the prosecuting authorities when a litigant admits that he has lied or is found to have lied to the court. … It seems to me that, with a view to promoting the public interest in a civil court having all relevant material before it, a general practice can be adopted pursuant to which the court does not report the matter to the prosecuting authorities, particularly if the person involved makes full and frank disclosure and apology. There will naturally be exceptions having regard to the nature and circumstances of the case.'
"That case was specifically about disclosure to the Inland Revenue of tax evasion, as to which the public interest considerations are different from where the wrongdoing and 'loss' can be reasonably enough remedied within the family proceedings themselves… As Charles J pointed out however that pragmatic approach, which probably accords with the general experience of most who practise in this area, is much less readily applicable where the exposed criminality is 'external' to the case, such as tax evasion or defalcation of a third party's money. In such circumstances as those, he said at 739E, that he generally favoured disclosure to the appropriate authorities. There is thus a discernible and reasonably logical distinction between: (i) those non-disclosures and lies which by their nature can be reasonably well remedied within the family proceedings, which may include by restorative financial orders and/or costs orders, or even by committal or a fine for contempt of court (subject to procedural formalities and to proof to the criminal standard); and (ii) those which by their nature cannot be. In the latter situation, disclosure to outside agencies may generally be seen as more likely in practice than in the former, although no sanctions can ever be ruled out in either case."
'…whilst recognizing the point I have made earlier that all the circumstances of each case should be taken into account, and thus the danger of generalisations, I would go further and state that when a court is satisfied that there has been illegal or unlawful conduct and it has no power similar to that of the criminal court, or the relevant public authority, to deal with such conduct it should generally report the relevant material to the relevant public authority.'
76. Parties to a matrimonial dispute who bring before the Court the facts and documents relating to their financial affairs may in general be assured that the confidentiality of that information will be respected. They are required by the Court to produce the information and documents, and it is a general principle, applicable to both civil and family proceedings, that confidential information produced by those who are compelled to do so will remain so unless and until it passes into the public domain. That confidence will in an appropriate case be protected by the anonymisation of any reported judgment.
77. Mr Balcombe submitted that the protection of this confidence is the result of a pact between the litigant and the court. That may be a helpful description of the principle. But if so, the Husband and the Interested Party did not keep to their part of the pact. In matrimonial ancillary proceedings, the obligation of the parties is to disclose the facts regarding their finances. In this case, what was put forward by the Husband and the Interested Party was, in substance, not the facts but fiction…
79. I start from the premise that, as Article 6 requires, justice should be seen to be done, and in general the judgment of the court should be public unless there is good reason for it not to be published or for the identities of the parties not to be disclosed. Litigants have a right to respect for their private life under Article 8, but that right is qualified and in many, indeed most, cases the interests of justice, and of justice being seen to be done, require facts that would otherwise remain private to be made public in a judgment. The general practice of the Family Division is for judgments in ancillary relief cases not to be published, or if published to be anonymised. That is done out of respect for the private life of the litigants and in order to promote full and frank disclosure, and because the information in question has been provided under compulsion.
80. However, different considerations apply where the information and documents provided by a litigant are false. That litigant has no entitlement to confidentiality in respect of that information or those documents. They do not evidence his private life. In general, there is no good reason why his conduct should not be public. In such a case, the court may order publication of a judgment without anonymisation, not as a sanction or punishment, but because there is no right to confidentiality in relation to that conduct.
Those judgments in the Court of Appeal may be seen to presage the more robust approach to publicity (without anonymisation, if there is good reason for the parties identities to be known) repeatedly encouraged by Sir James Munby P, particularly in Re J (a child contra mundum injunction) 2013 EWHC 2694 (Fam) and in his Guidance on Transparency in the Family Courts at 2014 Fam. Law 222. I do not, however, read the Judgments in Lykiardopulo in the one-dimensional way argued for by the mother, namely that lying equals loss of confidentiality. There is still the balance to be struck which the authorities show to be an essential part of making the necessary decision. Stanley Burnton LJ's reference to 'no entitlement to confidentiality' in my view clearly means no absolute entitlement, since he went on in the next two sentences to talk about the fact that in general there may be a public non-anonymised judgment and that the court may order such a judgment, although (significantly) 'not as a punishment'.
"While it is likely that there will always be litigants in the Division who fail to comply with the obligation of full and frank disclosure I believe that the prospect of public condemnation in the event that the default is exposed will act as a deterrent and so reduce the incidence of such misconduct".
 In my decisions of L v L (Ancilliary Relief Proceedings: Anonymity)  EWHC 2621 (Fam),  1 WLR 1259 and Appleton and Gallagher v News Group Newspapers Ltd and PA  EWHC 2689 (Fam),  2 FLR 1, I explained that the right to privacy in the hearing of an ancillary relief application would be forfeited on proof of iniquity. There is no doubt the husband's misconduct has been at the extreme end of the spectrum. It is in the public interest for his conduct to be exposed. The public should be aware of the scale of problems that courts administering justice and implementing the rule of law have to face at the hands of unrepresented and malevolent litigants determined to do everything they can to destroy the process.
42. A wilful refusal to comply with an order for disclosure will amount to a contempt of court which may attract the not insignificant sanction of imprisonment. The nature of the compulsion that may be applied to enforce compliance with the obligation to disclose information that is of an incriminating nature is therefore severe. The social purpose for which the Crown seeks to adduce the evidence in criminal proceedings is the suppression of tax evasion. No doubt the protection of the public revenue is an important social objective, but the question is whether the admission of evidence obtained from the accused under threat of imprisonment is a reasonable and proportionate response to that social need. In our view it is not. This is an unusual case in as much as the Crown accepts that without the admissions made by K it has insufficient evidence to maintain a case against him. In many cases information obtained by way of disclosure in ancillary relief proceedings will provide leads that enable the Crown to obtain evidence from other sources that is sufficient to support a prosecution and in such cases there will be no need to rely on evidence obtained from the accused himself. That has not been possible in this case, but even so, we do not think that the need to punish and deter tax evasion is sufficient to justify such an infringement of the right of the accused not to incriminate himself.
a. 'The links to Udachi Ltd all come from Companies House records
b. The details of each individual transaction come from
i. HMLR records and registers
ii. Documents required by ILEX to be published and other public statements of Etaireia
iii. Companies house documents
iv. Public auction records
v. Twitter and Facebook posts'
38…. In my judgment, the public interest lies in exposing attempts to mislead the court, even if the person making such attempts then repents of what he has done and corrects the situation. There can be no public interest in inhibiting full, frank and honest disclosure to the court; but there is a public interest in encouraging full, frank and honest disclosure, and disclosure which is not full, frank and honest should be publicised.
'In my judgment, it is no part of the functions of the Courts to act as investigators, or otherwise, on behalf of prosecuting authorities, the Revenue, or other public bodies. I also accept the submission that the court is not a "common informer".
The courts have a separate and discrete public function.
Further, in my judgment there is a strong public interest (within the strong public interest in the proper and efficient administration of justice) that the courts should limit themselves to carrying out their functions … and it is only when as a result of the performance of its functions a court is satisfied that an issue arises as to whether material should be disclosed in the overall public interest that it needs to consider, or should consider, that question.'
'12. It is well known that, on occasions, judges refer the papers in a case which has been before them to some outside agency with a view to that agency considering whether or not to take any steps arising out of the matters referred by the judge. Sometimes the papers are referred to the police, the Crown Prosecution Service or the Director of Public Prosecutions with a view to the possible commencement of criminal proceedings. Sometimes the referral is to some professional or other regulator. Sometimes the referral is to Her Majesty's Revenue and Customs. Sometimes, as here, the referral is to the Law Officers. No doubt there are other instances. Although the basis upon which such referrals are made has not very often been explored in any depth – the judgment of Charles J in A v A ; B v B  1 FLR 701 is an exception – there can be no question about the right of the judges to act in his way. Nor, in my judgment, can there be any objection to a judge, as here, referring the papers to the Law Officers with a view to them considering whether or not to bring proceedings for contempt; and, I should make clear, whether the contempt is criminal or, as in the present case, civil'.
'(2)… the confidentiality of that material …is subject to the limitation, or proviso, that further disclosure or use of the material can be made without the consent of the person who provided it if that further disclosure or use is in the overall public interest.
(3) This has the consequence that a party to ancillary relief proceedings should be aware that if he or she does not claim the privilege against self-incrimination (where it applies) and provides information where there is a public interest in its disclosure to a prosecuting or other public authority because for example it shows or indicates that there has been illegal or unlawful conduct…the court may make or authorize disclosure of that information in the overall public interest…
(7) In assessing where the overall public interest lies in respect of further disclosure of ancillary relief material, all the relevant circumstances of each case should be taken into account, but the main factors will be the competing public interests…
(14) …I accept that there is a strong public interest in both full and frank disclosure being made in ancillary relief proceedings and the compromise of all but a few applications for ancillary relief but…the totality of the points made in this judgment in respect of the public interest against disclosure lead to the conclusion that there is not a compelling argument that there will be a significant increase: (i) of cases in which a party does not make full disclosure with the consequence that the court and the other party is misled, or (ii) of cases which are not compromised, with consequential serious damage to the family justice system, if the court takes the general stance that when they are satisfied that there has been …illegal or unlawful conduct, they will consider whether this should be reported to the Revenue, or the appropriate public authority, and it will not only be in rare cases that such reports are made.'
"In such circumstances, and in the absence of any other factors argued to constitute some injustice, it seems to us again that the public interest in the investigation or prosecution of a specific offence of serious or complex fraud should take precedence over the merely general concern of the courts to control the collateral use of compulsorily disclosed documents. If such an offence had been suspected of having been committed in this country, the public interest would be in seeing that it could be investigated here if this is where the relevant documents were…. In such circumstances the public interest in proper disclosure in civil litigation does not require that documents necessary to the investigation or prosecution of serious fraud should be unavailable. Moreover, …the court's exceptional permission for relaxing the rule against collateral use in cases of serious fraud in the international context does not give cause for thinking that proper disclosure in the general run of cases will be undermined."
 Clearly there are family cases where the process uncovers and the court makes findings about things so serious that a disclosure does have to be made in the public interest: for example, where findings are made as to the perpetration of a child death; or where (say) a party who is a serving policeman is found to be corrupt; or where a party who works with children is proved to be a paedophile. Weighed up within the decision to disclose is always the question of proportionality, as to which every case is different and fact-specific. It was not established here, nor could it have been, that the father had for example been falsifying the accounts of his business, or committing defalcations with his client's money. …This is in no way at all to excuse his conduct, which was inexcusable, greedy and unfair; but it is to put what he did in its context…
[32…No one should however regard this case as a green light for failing to disclose relevant information and/or for lying to the family courts. There is and always has been a probability that anyone who does so will be the subject of sanctions of one sort or another, and of differing types and severity, including in appropriate circumstances disclosure to relevant outside agencies."
a. The current or past mortgage companies in relation to the family home, in respect of any representations she needs to make about her role in the obtaining of borrowing from them, or in the case of the current mortgage, its continuance; and
b. HMRC in respect of
i. the SDLT scheme for which she is prima facie jointly and/or solely liable;
ii. Any company of which she is or was a shareholder or company officer;
c. Any creditors of the husband's or hers, who may look to her for payment or seek to attach liability to her;
d. The police, or any other investigatory or regulatory body that may seek to communicate with her, or interview or investigate her either as suspect or potential witness; and
e. Any other person, entity, body or agency for the purposes of enforcement of the final order in these proceedings or any past costs orders.
Dated 24th January 2018